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There are plenty of reasons to install solar panels on your home. Solar PV panels produce zero-emissions energy, which is good for your health and the environment. They also significantly reduce your electricity costs and can even be a smart investment for your retirement. Over the past few years, the cost of installing solar has fallen dramatically. Today, there are a growing number of financing options and incentives that will help you cut costs even further so you can enjoy all of the benefits of solar.
Solar Loans Offer Easy, Accessible Financing Options for $0 Down
In the early days of solar, equipment was so expensive that buying solar panels wasn’t an option for most homeowners. The only way that solar was affordable was through the solar lease. In a solar lease agreement, the solar company that installs solar panels on your roof maintains ownership, and you pay monthly “rent” to them in exchange for the benefits of clean solar energy.
Solar leases require no up-front investment from homeowners, but they also offer lower savings than if you were to buy your solar panel system. Why is this? If you own your solar panel system, you enjoy the financial benefits of free solar electricity as soon as you break even on your solar investment.
By comparison, in a solar lease arrangement, you are always obligated to pay “rent” to the solar company for the duration of the 20-year term. As equipment and installation costs have fallen in recent years, buying solar panels outright has become more feasible for the average homeowner.
Even if you don’t have the cash on hand to purchase a solar panel system, there are a growing number of solar loan options available for homes and businesses across the country. With many solar loans, your monthly payments are low enough that you see net savings from month one of your solar panel installation.
Types of Solar Loans
Here are a few of the most common types of solar loans available for homeowners:
Home equity loans and lines of credit. When the solar industry was new and relatively unproven, banks were hesitant to grant loans for homeowners who wanted to install solar. However, there are now more than a million solar installations in the country. Banks are starting to recognize that solar is a worthwhile home improvement project that offers steady returns. As a result, home equity loans and home equity lines of credit are a popular way to fund solar installations.
Unsecured solar loans. As solar costs have fallen, more companies are offering specialized solar loan products. These loans don’t require your home as collateral, and you can often work directly with your solar installer to access them. Specialized solar loan products are typically easier to access but come with slightly higher interest rates.
PACE financing. Property-Assessed Clean Energy (PACE) financing is available for homes and businesses in certain states. If you choose PACE financing, you pay back your loan on an annual basis as part of your property taxes. Your electricity bill savings throughout the year are usually higher than your annual payment, so you’ll be “cash flow positive” from day one.
State/local government subsidized loan programs. Some states have established subsidized loan programs to create more favorable loan options for solar. For example, Massachusetts launched the Mass Solar Loan program for homes and businesses in December 2015. These programs use a few different tools, such as reduced interest rates and grants for low-income families, to make solar financing even more accessible.
Each of these options can help you get the most out of your solar investment by making it possible to buy your solar PV system. Use a comprehensive list of solar loan providers to find the best option in your state.
Many States and Municipalities Offer Tax Breaks and Other Incentives
The environmental benefits of solar are significant. To encourage the expansion of solar across the country and increase these benefits, many states, municipalities and even utilities offer solar financial incentives and rebates that reduce the cost of going solar.
Most significantly, the federal government offers a tax credit equal to 30 percent of your total solar costs. That means if your system costs $10,000, you’ll receive a $3,000 credit on your federal income taxes. Many states will offer additional state tax credits to cut your costs even further.
Some states and utilities also have programs that enable you to make money form the electricity generated by your solar panels. If your state has a market for solar renewable energy certificates (SRECs), you can sell your system’s SRECs to earn additional income. Some areas also have performance-based incentives that pay you per kilowatt-hour for the electricity that your system produces.
The main takeaway: the incentives available to you depend on where you live. A tool like EnergySage’s Solar Calculator can give you a customized instant estimate of your net costs and savings based on your electricity bills and your location.
Comparing Solar Quotes is Another Easy Way to Save
The price tag for your solar panel system depends on whether you’re buying in cash, using a solar loan, or signing a PPA or solar lease. It also will also vary based on the incentives and rebates available where you live. However, all solar shoppers can save money on their solar PV systems by doing one simple thing: comparing multiple quotes from different solar installers.
When you compare your options, you can identify the ideal combination of equipment, financing, and solar installation company for your home. You can also be confident that the prices that you are quoted are reasonable for your area. With the EnergySage Solar Marketplace, you’ll receive offers from qualified, pre-vetted solar installers in your area. You can use the Marketplace’s side-by-side comparison tables to review all of your options so that you can ensure that you’re getting the best deal on your solar energy system.
Vikram Aggarwal is the founder and chief executive of EnergySage, the online solar marketplace. EnergySage simplifies the process of researching and shopping for solar. By offering shoppers more choices and unprecedented levels of transparency, EnergySage allows consumers to select the solar installation quote that provides the best value for them, quickly and easily. Read all of Vikram's posts here.
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